Essar Oil is willing to offer 49 per cent stake to a single or multiple partners in its marketing venture, but plans to retain management control.
The company is scouting for a strategic ally to fund its plans of setting up around 1,700 retail outlets across the country over the next 4-5 years.
The company has also firmed plans to invite expressions of interest (EoIs) from prospective franchisees for setting up retail outlets, even as the divestment of IBP, for which it is one of the bidders, is still going on.
Also Read
The company is planning to construct around 400-500 outlets during the first year following the deregulation of the petroleum sector, before increasing them.
Raj Varma, chief executive of Essar Oil (marketing) said, "The pace at which we will roll out our retail outlets will depend on whether we get IBP, which already has a ready setup with over 1,500 outlets and sales of about 4.5 million tonne."
"The outlets are going to be located all over the country, although initially we will be concentrating more on the northern and western markets, as the demand is growing faster and also the throughput per outlet is expected to be higher," Varma added.
Essar Oil is likely to set up most of its retail outlets on the highways, to keep construction costs lower. The company is eyeing locations on the Golden Quadrilateral, which is currently under construction, in view of the high traffic expected to flow on it. The company is planning to spend around Rs 1 crore per outlet.
Taking a cue from the oil PSUs, which are now frantically trying to purchase dealer-owned sites to prevent them from switching loyalties to other oil companies in the post-deregulation period, the company will focus on taking land on lease right from beginning.
Also, Essar Oil has initiated talks with oil PSUs to source products domestically rather than importing them. "Today, there is a surplus of petrol and diesel in India, and according to our projections, it is likely to continue this way for another 5-6 years. We are hopeful that we can source products domestically," Varma added.
Varma is hopeful that the company's 10.5-million-tonne refinery at Vadinar will commence operations from the middle of 2003, and is planning to either import or buy the products from domestic oil companies.